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TRANSITIONAL PROVISION UNDER GST – SEC 140(4)

September 23, 2017

Credit of eligible duties and taxes in respect of inputs held in stock allowed incertain situations

THE LAW:

140(4) - Credit of eligible duties and taxes in respect of inputs held in stock allowed in certain situations.

A registered person, who was engaged in the manufacture of taxable as well as exempted goods under the Central Excise Act, 1944 or provision of taxable as well as exempted services under Chapter V of Finance Act, 1994, but which are liable to tax under this Act shall be entitled to take, in his electronic credit ledger.

(a) the amount of Cenvat credit carried forward in a return furnished under the existing law by him in accordance with the provisions of sub-section (1); and

(b) the amount of Cenvat credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day, relating to such exempted goods or services, in accordance with the provisions of sub-section (3).

 

THE LAW SIMPLIFIED

Applicability of the provision:

This above transition provision is applicable to the following registered persons:

  1. Who was engaged in the manufacture of taxable goods under the Central Excise Act, 1944.
  2. Who was engaged in the manufacture of exempted goods under the Central Excise Act, 1944.
  3. Who was engaged in the provision of taxable services under Chapter V of Finance Act, 1994.
  4. Who was engaged in the provision of exempted services under Chapter V of Finance Act, 1994.

 

Availability of credit:

Credit of eligible duties and taxes under the above section is available on:

  1. Inputs (not capital goods) held in stock and inputs contained in semi-finished goods or finished goods held in stock as on appointed day i.e 1st July, 2017.
  2. Such credit can be taken in the electronic credit ledger.

 

Eligible duties and taxes:

The expression, ‘eligible duties and taxes’ in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day means:

 

Sl No

Nature of duty

Act

1

Central Excise duty

First Schedule to the Central Excise Tariff Act, 1985(5 of 1986)

2

Central Excise duty

Second Schedule to the Central Excise Tariff Act, 1985(5 of 1986)

3

Additional excise duty

Section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978 (40 of 1978)

4

Additional excise duty

Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957(58 of 1957)

5

National Calamity Contingent Duty

Section 136 of the Finance Act,2001(14 of 2001)

6

Additional duty

Customs Tariff Act Section 3(1) and 3(5)

7

Service Tax

Section 66B of the Finance Act, 1994

 

Conditions to be satisfied for availing transitional credit:

The following conditions needs to be satisfied for availing credit of eligible duties and taxes under the provisions of the aforesaid section:

  1. The taxpayer is registered under GST
  2. The taxable person must have been engaged in the manufacture of taxable as well as exempted goods under the Central Excise Act, 1944 or provision of taxable as well as exempted services under Chapter V of Finance Act, 1994
  3. The amount of credit is admissible as ITC under the GST regime.
  4. The inputs or goods on which credit is being availed will be used or are intended to be used for making taxable supplies under this Act.
  5. The registered person is eligible for input tax credit on such inputs under this Act.
  6. The invoices and documents of the goods/services s on appointed date hould not be older than 1st July 2016.
  7. The supplier of services is not eligible for any abatement (exemptions) under this Act.
  8. The registered person must have filed all returns under the previous laws regularly during last 6 months of the appointed date i.e from 1st January 2017 to 30th June 2017.

 

CENVAT Credit

The registered person shall be entitled to take in his electronic credit ledger:

  1. Amount of CENVAT credit carried forward in a return furnished under earlier law in terms of section 140(1).
  2. Amount of CENVAT credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day, relating to exempted goods or services, in terms of section 140(3).

Note – Please refer Fundscoop Blogs for Transitional Provisions under Sec 140(1) and Sec 140(3)

Procedure for claiming the aforesaid credit

  1. The above scheme of availing Input Tax Credit shall be available for six tax periods from the appointed date.
  2. The registered person shall be allowed to take the credit under the above section only if he submits the FORM GST TRAN-1 electronically on the GSTN portal within 60 days of the appointed date.
  3. Registered person availing this scheme must furnish the details of stock held by him and submit a statement in FORM GST TRAN-2 at the end of each of the six tax periods during which the scheme is in operation indicating the details of supplies of such goods affected during the tax period.
  4. The amount of credit allowed shall be credited to the electronic credit ledger.

 

Time limit for filing Tran-1 Form

Note – The following decisions have been taken in the 21st GST Council Meeting held on  9th September 2017

  1. The due date for submission of FORM GST TRAN-1 has been extended by one month i.e. 31st October, 2017.
  2. FORM GST TRAN-1 can be revised once.

 

Disclaimer - The information provided in this document is for general information only. It is based on the information available publicly. The user of this document should be aware that the interpretation or implications of relevant GST rules may change/vary depending upon circumstances.

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